Pension benefits show no signs of slowing

Local governments have seen their CalPERS rates skyrocket due to investment losses.

May 17, 2011|By Melanie Hicken, melanie.hicken@latimes.com

CITY HALL — As negotiations with city employee unions get underway, the city’s top pension advisor has warned that Glendale’s skyrocketing tab for retirement benefits could remain high for years.

Public safety employees who had retired in the past five years as of 2001 received an average of $35,400 annually for their years working in Glendale, according to a report by John Bartel, an actuary who advises more than 100 cities throughout the state. By 2009, the average had jumped to $78,400.

For non-public-safety employees — who Bartel said are more likely to have worked for multiple agencies — the average pension benefit for those who retired in the past five years rose from $24,700 in 2001 to $36,000 in 2009, according to his report.

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The jump is fueled by increased salaries and benefits approved by the City Council in the past decade.

At the time of the benefit increases — negotiated with the unions and approved by the City Council — California Public Employees Retirement System officials had pledged that the city's annual contribution rate would not spike as a result.

But Glendale’s annual CalPERS contribution has jumped dramatically as city officials have been forced to make up for tens of millions in unfunded liabilities, or the difference between promised benefits and the value of the city's current pension investment portfolio.

“All I saw was things looking good,” City Councilman Dave Weaver said during a budget meeting last week. “We thought we were on top of the world and it would continue forever.”

But Bartel, who was addressing the City Council, said last week that at the time there were already warning signs that the stock market could turn.

“I think there is nobody who has no fault except perhaps taxpayers,” Bartel said. “And they’re the ones that have to foot the bill.”

Local governments statewide have seen their CalPERS rates skyrocket as the pension giant struggles to backfill investment losses. In Glendale, the city can expect to pay more than $135 million into CalPERS through 2014, according to an analysis of rate forecasts in the city’s annual financial report.

Bartel warned that Glendale’s pension obligations could remain at current levels or higher through 2017, even if the state system maintains improved investment returns.